8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 12, 2020

ELECTROMED, INC.

(Exact Name of Registrant as Specified in Its Charter)

Minnesota	001-34839	41-1732920
(State or Other Jurisdiction of<br><br><br>Incorporation)	(Commission File Number)	(I.R.S. Employer Identification<br><br><br>Number)

500 Sixth Avenue NW

New Prague, MN 56071

(Address of Principal Executive Offices)(Zip Code)

(952) 758-9299

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.01 par value	ELMD	NYSE American LLC
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
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	Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        ☐
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Item2.02              Results of Operations and FinancialCondition

On May 12, 2020, Electromed, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2020. The full text of the press release is attached as Exhibit 99.1.

Item 9.01              Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number	Description	Method of Filing
99.1	Press Release dated May 12, 2020	Furnished Electronically

The information contained in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ELECTROMED, INC.
Date:  May 12, 2020	By: /s/ Jeremy T. Brock
	Name:	Jeremy T. Brock
	Title:	Chief Financial Officer

Exhibit99.1

FORIMMEDIATE RELEASE

Electromed,Inc. Announces Fiscal 2020 Third Quarter Financial Results

-- 18.0% revenue growth from prior year period with

net income of $0.7 million --

NewPrague, Minnesota – May 12, 2020 – Electromed, Inc. (“Electromed” or the “Company”) (NYSE American: ELMD), a leader in innovative airway clearance technologies, today announced financial results for the three months ended March 31, 2020 (“Q3 FY 2020”).

Q3FY 2020 Highlights

●	Net<br> revenue increased 18.0% to $8.7 million from $7.4 million for the three months ended<br> March 31, 2019 (“Q3 FY 2019”).
●	Operating<br> margin improved to 10.4% from 6.3% in Q3 FY 2019.
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●	Net<br> income rose 85.1% to $0.7 million, or $0.07 per diluted share, from $0.4 million, or<br> $0.04 per diluted share, in Q3 FY 2019.
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●	Cash<br> balance as of March 31, 2020 was $9.9 million benefiting from $0.9 million in cash flow.
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Kathleen Skarvan, President and Chief Executive Officer of Electromed, commented, “During this challenging time brought on by the COVID-19 pandemic, our priority has been the safety and health of our employees. We have continued to manufacture product and implemented changes to our workplace in accordance with the guidelines from the Centers for Disease Control and Prevention. For our clinician and patient protection, we have transitioned our sales team to primarily virtual visits and are training patients virtually since COVID-19 pandemic shelter-in-place orders prompted many clinics to close temporarily, limit their operating hours or conduct business virtually.”

Ms. Skarvan continued, “Serving our patients, particularly at this time when healthcare systems may be overwhelmed by COVID-19 patients, to improve airway clearance, enhance respiratory function and reduce hospitalizations is critically important. We applaud the entire Electromed team for their unwavering commitment that ensured seamless manufacturing and delivery of SmartVest® Airway Clearance devices that resulted in outstanding revenue growth in both our homecare and institutional sales channels for the quarter. Operating margin improved by more than 400 basis points compared to the prior year period, notwithstanding increases in certain SG&A costs and more than doubling of R&D investment, reflecting our ongoing focus on cost containment.”

“We continue to modify our processes and practices in an effort to mitigate the impact of COVID-19 on our business so that we can continue to provide to our clinicians and their patients who need airway clearance therapy access to our SmartVest into the future. With our differentiated SmartVest airway clearance products, a large underpenetrated bronchiectasis market, and our strong balance sheet to support our future initiatives we believe we are positioned to continue delivering profitable growth as the nation emerges from this crisis.”

Centersfor Medicare and Medicaid Services Waiver

In March the Centers for Medicare and Medicaid Services (CMS) modified requirements during this pandemic for prescribing respiratory related devices, of which SmartVest is included. Clinical indications and documentation typically required will not be enforced for respiratory related products including SmartVest (HFCWO (E0483), LCD L33785); Medicare patients only. The minimum documentation now requires a valid order and documentation of a respiratory related diagnosis. Face to face and in-person requirements for respiratory devices are being waived. We have taken additional actions to stay connected to our practitioners during this challenging time.

Q3FY 2020 Review

Net revenue increased 18.0% to $8.7 million, from $7.4 million in Q3 FY 2019, primarily driven by higher home care revenue. Home care revenue rose 14.3% to $7.8 million from $6.9 million in Q3 FY 2019, primarily due to a higher average allowable based on payer mix and a greater percentage of referrals getting approval. Field sales employees totaled 44, of which 37 were direct sales, at the end of Q3 FY 2020, compared to 41 at the end of Q3 FY 2019, of which 35 were direct sales. Annualized home care revenue was $880,000 per direct field sales employee, exceeding target productivity range of $750,000 to $850,000. Institutional revenue increased 46.9% to $0.6 million from $0.4 million in Q3 FY 2019, primarily due to a higher average selling price per device and increase in volume of devices and garments sold. In Q1 FY 2020 the Company began selling to home medical equipment distributors who in turn sell the SmartVest System in the U.S. home care market. Revenue from home medical equipment distributors totaled $164,000 during Q3 FY 2020.

Gross profit increased 18.3% to $6.6 million, or 75.4% of net revenue, from $5.6 million, or 75.2% of net revenue, in Q3 FY 2019. The increase in gross profit resulted primarily from an increase in home care revenue.

Operating expenses, which include selling, general and administrative (“SG&A”) as well as research and development (“R&D”) expenses, totaled $5.7 million, or 65.0% of net revenue, compared with $5.1 million, or 69.0% of net revenue, in Q3 FY 2019. SG&A expenses increased by $349,000 to $5.3 million from $4.9 million in Q3 FY 2019. As a percentage of revenue, SG&A expenses improved to 60.5% compared to 66.7% in the same period in the prior year. R&D expenses increased to $392,000 from $171,000 in Q3 FY 2019, for the development of a next generation device.

Operating income totaled $0.9 million, compared to $0.5 million in Q3 FY 2019.

Net income before income taxes totaled $0.9 million compared to $0.5 million in Q3 FY 2019.

Net income equaled $0.7 million, or $0.07 per diluted share, compared to $0.4 million, or $0.04 per diluted share, in Q3 FY 2019. In Q3 FY 2020, income tax expense totaled $294,000, compared to $139,000 in the same period of the prior year.

Year-to-DateFY 2020 Summary

For the nine months ended March 31, 2020, net revenue grew 12.8% to $25.6 million, from $22.7 million in the same period of fiscal 2019. Gross margins were 76.6%, compared to 75.7% in the prior fiscal year period, while net income was approximately $2.9 million, or $0.33 per diluted share, compared to approximately $0.9 million, or $0.10 per diluted share, in the first nine months of fiscal 2019.

FinancialCondition

The Company’s balance sheet at March 31, 2020 included cash of $9.9 million, accounts receivable of $13.3 million, no debt, working capital of $24.2 million, and shareholders’ equity of $29.3 million.

ConferenceCall

Management will host a conference call on Wednesday, May 13, 2020 at 7:30 am CT (8:30 am ET) to discuss Q3 FY 2020 financial results and other matters.

Interested parties may participate in the call by dialing:

●	(877)<br> 407-9753 (Domestic)
●	(201)<br> 493-6739 (International)
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The conference call also will be accessible via the following link:

https://78449.themediaframe.com/dataconf/productusers/elctr/mediaframe/37769/indexl.html

For those who cannot listen to the live broadcast, an online webcast replay will be available in the Investor Relations section of the Company’s web site at: http://investors.smartvest.com/

AboutElectromed, Inc.

Electromed, Inc. manufactures, makes, and sells products that provide airway clearance therapy, including the SmartVest^®^ Airway Clearance System, to patients with compromised pulmonary function. The Company is headquartered in New Prague, Minnesota and was founded in 1992. Further information about the Company can be found at www.smartvest.com.

CautionaryStatements

Certainstatements in this press release constitute forward-looking statements as defined in the U.S. Private Securities Litigation ReformAct of 1995. Forward-looking statements can generally be identified by words such as “anticipate,” “believe,”“estimate,” “expect,” “intend,” “may,” “plan” “potential,”“should,” “will,” and similar expressions, including the negative of these terms, but they are not theexclusive means of identifying such statements. Forward-looking statements cannot be guaranteed, and actual results may vary materiallydue to the uncertainties and risks, known or unknown associated with such statements. Examples of risks and uncertainties forthe Company include, but are not limited to the duration, extent and severity of the COVID-19 pandemic, including its effectson our business, operations and employees as well as its impact on our customers and distribution channels and on economies andmarkets more generally, the competitive nature of our market; changes to Medicare, Medicaid, or private insurance reimbursementpolicies; changes to state and federal health care laws; changes affecting the medical device industry; our ability to developnew sales channels for our products such as the homecare distributor channel; our need to maintain regulatory compliance and togain future regulatory approvals and clearances; new drug or pharmaceutical discoveries; general economic and business conditions;our ability to renew our line of credit or obtain additional credit as necessary; our ability to protect and expand our intellectualproperty portfolio; the risks associated with expansion into international markets, as well as other factors described from timeto time in the Company’s reports filed with the Securities and Exchange Commission (including the Company’s most recentAnnual Report on Form 10-K, as amended from time to time, and subsequent Quarterly Reports on Form 10-Q and Current Reports onForm 8-K). Investors should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertaintiesor potentially inaccurate assumptions investors should take into account when making investment decisions. Shareholders and otherreaders should not place undue reliance on “forward-looking statements,” as such statements speak only as of the dateof this release.

Contacts:
Electromed, Inc.	The Equity Group Inc.
Jeremy Brock, Chief Financial Officer	Kalle Ahl, CFA
(952) 758-9299	(212) 836-9614
investorrelations@electromed.com	kahl@equityny.com
	Devin Sullivan
	(212) 836-9608
	dsullivan@equityny.com

Financial Tables Follow:

Electromed,Inc.

Condensed Balance Sheets

		June 30, 2019
Assets
Current<br> Assets
Cash	9,933,309	$	7,807,928
Accounts<br> receivable (net of allowances for doubtful accounts of 45,000)	13,290,402		12,760,042
Contract<br> assets	1,146,842		995,847
Inventories, net	2,646,971		2,622,000
Prepaid<br> expenses and other current assets	360,956		353,214
Income<br> taxes receivable	409,064		—
Total<br> current assets	27,787,544		24,539,031
Property<br> and equipment, net	3,878,347		3,604,744
Finite-life<br> intangible assets, net	604,905		581,413
Other<br> assets	100,421		45,044
Deferred<br> income taxes	602,000		629,000
Total<br> assets	32,973,217	$	29,399,232
Liabilities<br> and Shareholders’ Equity
Current<br> Liabilities
Current<br> maturities of other long-term liabilities	76,866	$	30,320
Accounts<br> payable	874,133		586,575
Accrued<br> compensation	1,444,480		1,404,662
Income<br> taxes payable	—		288,511
Warranty<br> reserve	780,000		810,000
Other<br> accrued liabilities	446,573		530,453
Total<br> current liabilities	3,622,052		3,650,521
Other<br> long-term liabilities	24,324		14,737
Total<br> liabilities	3,646,376		3,665,258
Commitments<br> and Contingencies
Net<br> increase (decrease) in cash
Shareholders’<br> Equity
Common<br> stock, 0.01 par value; authorized: 13,000,000 shares; 8,483,785 and 8,408,351<br> issued and outstanding at March 31, 2020 and June 30, 2019, respectively	84,838		84,084
Additional<br> paid-in capital	16,867,053		16,127,826
Retained<br> earnings	12,374,950		9,522,064
Total<br> shareholders’ equity	29,326,841		25,733,974
Total<br> liabilities and shareholders’ equity	32,973,217	$	29,399,232

All values are in US Dollars.

Electromed,Inc.

Condensed Statements of Operations (Unaudited)

	For the Three Months Ended<br>March 31,				Forthe Nine Months Ended <br><br>March 31,
	2020		2019		2020		2019
Net<br> revenues	$	8,743,897	$	7,407,779	$	25,593,337	$	22,696,149
Cost<br> of revenues		2,150,347		1,833,478		5,981,931		5,516,517
Gross profit		6,593,550		5,574,301		19,611,406		17,179,632
Operating<br> expenses
Selling,<br> general and administrative		5,288,485		4,938,992		15,148,344		15,361,590
Research<br> and development		391,962		170,757		634,376		476,785
Total operating expenses		5,680,447		5,109,749		15,782,720		15,838,375
Operating income		913,103		464,552		3,828,686		1,341,257
Interest<br> income, net		34,171		27,374		111,200		57,348
Net income before income taxes		947,274		491,926		3,939,886		1,398,605
Income<br> tax expense		294,000		139,000		1,087,000		508,000
Net income	$	653,274	$	352,926	$	2,852,886	$	890,605
Income<br> per share:
Basic	$	0.08	$	0.04	$	0.34	$	0.11
Diluted	$	0.07	$	0.04	$	0.33	$	0.10
Weighted-average<br> common shares outstanding:
Basic		8,403,154		8,325,346		8,390,916		8,294,568
Diluted		8,880,794		8,612,448		8,759,493		8,637,414

Electromed, Inc.

Condensed Statements of Cash Flows (Unaudited)

	Nine Months Ended March 31,
	2020			2019
Cash Flows From Operating<br>Activities
Net income	$	2,852,886		$	890,605
Adjustments<br> to reconcile net income to net cash provided by operating activities: Depreciation		469,784			527,472
Amortization<br> of finite-life intangible assets		90,863			89,728
Amortization<br> of debt issuance costs		—			1,958
Share-based<br> compensation expense		676,558			729,470
Deferred<br> income taxes		27,000			27,000
Loss<br> on disposal of property and equipment		1,294			1,710
Changes<br>in operating assets and liabilities:
Accounts receivable		(530,360	)		(464,400	)
Contract<br> assets		(150,995	)		(67,463	)
Inventories		(13,852	)		(205,524	)
Prepaid<br> expenses and other assets		50,329			490,147
Income<br> tax receivable		(409,064	)		(239,989	)
Income<br> tax payable		(288,511	)		(397,390	)
Accounts<br> payable and accrued liabilities		136,361			(211,371	)
Net cash provided by operating activities		2,912,293			1,171,953
Cash Flows From Investing<br>Activities
Expenditures for property and equipment		(752,875	)		(197,445	)
Expenditures<br> for finite-life intangible assets		(97,460	)		(43,309	)
Net cash used in investing activities		(850,335	)		(240,754	)
Cash Flows From Financing<br>Activities
Principal payments on long-term debt including capital lease<br> obligations		—			(1,103,001	)
Issuance<br> of common stock upon exercise of options		63,423			251,849
Net cash provided by (used in) financing activities		63,423			(851,152	)
Net increase in cash		2,125,381			80,047
Cash
Beginning<br> of period		7,807,928			7,455,844
End<br> of period	$	9,933,309		$	7,535,891